Gulf telecom giant to combine its branches

DUBAI - Reuters

A man walks out of an Etisalat shop at the Dubai World Trade Center. REUTERS photo

Etisalat, the Gulf’s No. 2 telecom operator, expects 2013 revenue of up to $9.4 billion, according to a presentation the company gave to analysts, with the former monopoly also looking to consolidate its smaller assets.

This consolidation in what it terms “fragmented markets” could be through mergers, acquisitions or asset sales, the document states. The state-owned telco does not specify in which countries it wants to consolidate its operations through sale, merger or acquisitions, but these are likely to include low income African markets where it is a relatively small player and capital expenditure costs are often disproportionately high due to a lack of security, power and other infrastructure.

The United Arab Emirates’ largest listed company, which has operations in 15 countries in the Middle East, Africa and Asia, has suffered a sustained profit slump in recent years as it took write downs of $1.6 billion on troubled foreign units and tougher competition at home and abroad also weighed on the bottom line.
Etisalat’s 2012 profit was 6.74 billion dirhams ($1.84 billion), down 24 percent from a 2009 peak of 8.84 billion dirhams. Yet revenue has grown over this period, reaching a record high of 32.95 billion dirhams ($8.97 billion) last year. This was up 2.2 percent from a year earlier. The company expects revenue to grow 3-5 percent in 2013, according to the presentation.